If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will a. earn economic profits. b. earn economic losses. c. earn zero economic profits. d. produce a lower quantity of output than is socially optimal.
Added by Steven S.
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This is because the monopolist cannot charge a higher price than the regulated maximum price. At this point, the monopolist will earn zero economic profits because the price is equal to the marginal cost, which means that the monopolist is just covering its costs Show more…
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